Retirees’ Futures Hinge on Candidates’ Plans for Social Security

At 81, Sara Moore still occasionally drives five blocks to the grocery store in her 1993 Buick, which her son had painted pink for breast cancer awareness. She is a survivor.

She also survives on a Social Security check of just $984 a month. After rent and cable television, she said her largest expense was food. She hunts for specials, like the 10 frozen Lean Cuisine dinners she recently bought for $10. Fresh fruits and vegetables are a splurge, but she said she skips extras like ice cream.

“I just manage,” said Ms. Moore, of Chicago, who was a certified nursing assistant before her cancer was diagnosed in 2001. After all her monthly bills are paid — she also receives food deliveries from a local pantry — she has roughly $50 left.

Like Ms. Moore, millions of retirees rely heavily on modest checks from Social Security. The average monthly benefit is $1,337, and about 64 percent of beneficiaries older than 65 receive at least half of their income from the program, according to the Social Security Administration. For nearly half of unmarried beneficiaries, it accounts for a whopping 90 percent of income.

With the race for the 2016 presidential nominations well underway, candidates have begun floating proposals to shore up the program’s finances. For years, most of the plans that have been offered to ensure that the self-financing program can support itself have relied largely on cutting benefits.

But now Democrats like Senator Bernie Sanders of Vermont and the former Maryland governor Martin O’Malley are trying to reverse the usual conversation, calling for an expansion of the program by requiring higher-income workers to pay more in payroll taxes, the dedicated tax stream that pays for the benefits.

In contrast, most Republicans, adamantly opposed to any tax increases, continue to offer proposals that focus on cutting benefits, in ways that critics say could harm the most vulnerable retirees, while doing little to overcome the system’s financial imbalance.

“Americans are living longer,” Gov. Chris Christie of New Jersey, who is seeking the Republican nomination, said in a campaign speech in April in New Hampshire. “This is something to celebrate but, at the same time, we can’t ignore the real effect that has on Social Security.”

But not everyone is living longer. Average life expectancies have grown in the last century, but better-paid, better-educated people tend to live longer than people who earn less. And the gap between them has grown over time, a recent report has shown. In fact, life expectancy has declined slightly for lower earners.

“I have never been a fan of raising the retirement age,” said Peter Orszag, a former budget director for President Obama, who recently wrote a congressionally mandated report on Social Security for the National Academies of Sciences, Engineering and Medicine.

“Anyone who is making the argument that we should raise the retirement age because of an increase in the life expectancy — that argument, I think, is fundamentally misguided and misleading,” Mr. Orszag said. “The average is masking quite different patterns depending where you are on the income distribution.”

Each year the “full” retirement age is raised translates into a benefit cut of nearly 7 percent for future retirees who are affected. The full retirement age is already scheduled to rise from 66 to 67 — for people born after 1959 — which will hold down benefits for that group.

Consider an individual who would receive a full benefit of $2,000 a month at age 67 under current law. She would receive $1,600 a month at age 67 if the full retirement age were raised to 70, according to the Center on Budget and Policy Priorities. Instead of receiving $2,480 at age 70 under current law, she would have to wait until 70 to get $2,000.

The fact that people are living longer is not the main reason the Social Security Trust Fund is expected to be depleted by 2034, when incoming payroll taxes may only be enough to pay 79 percent of promised benefits. According to the Social Security Administration, the increase in longevity accounts for 20 percent of the program’s long-term shortfall.

The most significant issue, according to Stephen C. Goss, the agency’s chief actuary, is that fewer workers are paying taxes into the program — given a lower birthrate — while more retirees are collecting their checks.

Though presidential candidates from opposing parties have starkly different approaches to closing that gap, most Americans, across the ideological spectrum, are opposed to any further benefit reductions, according to a Pew Research Center poll last year. Over all, more than two-thirds said that benefit cuts should not be an option. And majorities in every group, including nearly 59 percent of “consistently conservative” individuals, agreed.

Aware of the public opposition to cuts in Social Security, Governor Christie has emphasized a feature of his plan that eliminates benefits for the wealthiest Americans, arguing that will help ensure the program’s survival for younger workers. But many of his proposals amount to a series of cuts that do little to improve the program’s more immediate solvency issues, according to an analysis by the Urban Institute.

“The Christie proposal does nothing to help Social Security’s solvency problems before 2034, when current law trust fund balances are projected to be depleted,” said Karen Smith, a senior fellow at the Urban Institute, who ran the analysis. “His proposal reduces program revenue and does not reduce benefits enough soon enough to make Social Security solvent.”

It would help lower costs for future generations, in part by gradually raising the full retirement age by two months a year, beginning in 2022, until it reaches 69. Governor Christie would also gradually increase the early retirement age to 64 from 62, which is when retirees can now begin claiming benefits at a reduced rate. Separately, to encourage older people to work longer, he would eliminate payroll taxes for those over age 62.

His plan also introduces a means test: Future retirees with retirement income of more than $80,000 — outside of Social Security benefits — would receive lower benefits on a sliding scale, with benefits phasing out altogether for those with $200,000 or more. Critics, however, say that move would save very little money, while threatening the broad appeal of the program.

“We should worry about turning a program that has gotten its strength from being a program that everyone pays into and gets benefits out of into a welfare program,” said Joan Entmacher, vice president for family economic security at the National Women’s Law Center. Besides, she added, “you can’t get much savings out of means-testing Social Security unless you go after the middle class.”

Lastly, Governor Christie would slow the growth of beneficiaries’ monthly checks, which rise with inflation so that retirees maintain their purchasing power. He would adopt an inflation measure that is projected to rise about 0.3 percentage points slower each year.

But retiree advocates and other specialists, including some conservatives who want to shave benefits, say the change would hurt the most vulnerable retirees, because they would feel a tighter pinch as they aged.

“If we are going to cut Social Security benefits, and I think we should, I want to cut for the younger retirees who can work longer,” said Andrew Biggs, resident scholar of the American Enterprise Institute and a former principal deputy commissioner at the Social Security Administration. “Not those who are older and can’t.”

Senator Sanders’s proposal takes the opposite approach; it would increase retirees’ monthly checks. His plan, which would make the trust fund solvent through 2065, would raise payroll taxes on higher-earning households. Now, employees owe payroll taxes of 6.2 percent of their income — their employers pay another 6.2 percent — up to the current cap of $118,500 in earnings.

At first, the Sanders plan would not apply payroll taxes to earnings between $118,500 and $250,000, but it would apply to earnings above that amount. Since the payroll cap generally rises over time with average wages, the payroll tax would apply to all earned income within about 18 years. He also calls for adding a separate 6.2 percent tax on investment income for single tax filers with income exceeding $200,000 (or $250,000 for married couples filing jointly).

The extra revenue would pay for raising benefits by roughly $65 a month, as well as for a more generous cost-of living adjustment: He would peg benefits to a new measure of inflation where benefits are estimated to rise about 0.2 percentage points more each year than they do now.

“Sanders’s proposals for Social Security certainly go in the right direction and are actually quite mainstream since experts are now considering strengthening and expanding the system,” said Teresa Ghilarducci, a labor economist, professor and commissioner for the Bipartisan Policy Center’s retirement security initiative, which is studying the effects of changes to the program. “This is certainly not the time to reduce Social Security benefits.”

What would it take to simply preserve the program as is? Raising the payroll tax by three percentage points, to 15.4 percent from 12.4 percent — or 1.5 percentage point for workers and employers — would shore up the system for the next 75 years, according to Ms. Smith of the Urban Institute. Or immediately eliminating the cap on earnings — that is, taxing all income above $118,500, as the Medicare levy does — would close about 88 percent of the shortfall.

For retirees like Ms. Moore who have little savings and no pension, Social Security is the last leg of the retirement stool to lean on. “If I didn’t have Social Security,” she said, “I would be doing a whole lot worse.”

A version of this article appears in print on , on Page B1 of the New York edition with the headline: Comparing Candidates’ Safety Net Proposals . Order Reprints | Today’s Paper | Subscribe